Stock Market: Behind The Scenes

By: Andrea Rodenas

Stocks trading and investment should be “as easy as it gets.” You have the means and resources to buy some stocks, invest it on a profitable company or corporation, wait for it to increase its value and in the end make much more money than you initially invested on. That’s the perception of most people about how the stock market works but in reality, it’s just a market that revolves around market principles, unpredictability and superstitions.

Superstitions, believe it or not, have been ruling the stock market for decades. They have them wrapped around their fingers. Why? There’s actually no particular answer to this. The stock traders and investors, at least some of them, just follow it. Neither a concrete statistical data can explain why the stock market can turn into a cemetery because of an event, a day or even a month that has nothing but myths and legends about the stock market. Other than the basic percentages of stock fall or increase, there is no more formula to superstitions. Here are some examples of superstitions that mostly affects the stock market that I find quite interesting and mind-blowing:

  1. September is the worst time to trade: According to Turney Duff of CNBC, “September is the worst month of the trading year: The average percent change from 1928 to 2015 is down 1 percent.”
  2. Black Monday: Some of the worst decline in Sensex (the benchmark index of the Bombay Stock Exchange in India) are recorded on a Monday. The Dow Jones 23 per cent drop in 1987 and the other seven out of the twenty biggest declines in Sensex happened on a Monday.
  3. China’s lucky 8 and unlucky 4: Most Chinese investors trade based on this fact especially when it comes to their stock’s numerical codes.
  4. Full Moon: Full moon is a bad sign for the stock market. Studies show that on a full moon, the returns in stocks are much lower.
  5. Super Bowl: Even football can affect the stock market! It was believed that if a National Football Conference team wins then it’s a good sign for the stock market but when an American Football Conference team wins then it will be a bad sign. Duff said that from 1967 to 2003 it was correct 68 percent of the time.

Recently the super blue blood moon appeared after more than 150 years and the stock market was not safe from this moon’s appearance. According to Wilson Sy, the effect of this rare appearance resulted to a 666 points drop in Dow followed by a 1,096 points drop the week after. In addition, Dow, S&P 500 and Nasdaq plunged by 4.1 percent, 3.9 percent and 3.5 percent, respectively and the PSEi dropped 148 points the day before the full moon and another 146 points on the day of the super blue blood moon, resulting in a 3.2 percent decline over two days.

Whether or not there is really a correlation between the above-mentioned events and the performance of the stock market is still unknown. What we’ve grasped from this is that the stock market isn’t just ruled by the knowledgeable, the radicals, the business-minded and the elite. The superstitious ones also dominate and compete in this arena. Moreover, stock market is not safe from superstitions, as what some people would’ve thought.  Superstitions became part of the index of the stock market. Well it won’t hurt to follow right? Or will it?

 

References:

 

https://www.cnbc.com/2015/08/31/8-market-superstitions-should-you-be-afraid-commentary.html

https://beta.philstar.com/business/2018/02/05/1784581/super-blue-blood-moon-triggers-bloodbath-stocks

https://www.irishtimes.com/business/personal-finance/friday-the-13th-and-lunar-lunacy-superstition-and-the-stock-market-1.3246968

http://www.thehindubusinessline.com/todays-paper/tp-investmentworld/Of-stock-markets-and-superstitions/article20013765.ece

http://www.businessinsider.com/super-bowl-indicator-patriots-win-could-mean-tough-year-for-stocks-superstition-says-2018-2

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